With these protocols you deposit STX and stack STX, mint their stablecoin (and repay it with the stacked STX) and provide liquidity earning rewards of 100+% a year.
Yeah, if you're farming like this in size then you should insure de-peg risk e.g. with Nexus Mutual. They'll buy your busted stable at $0.90 on the dollar so you still lose something but its good to know you can get 90% of your capital back out fairly quickly (check Nexus history on paying claims).
Exactly. Nobody is big enough to bail out all of stables if one fails. There are different ways to farm in DeFi, not all strategies have exposure to stablecoins. We will be covering this all in more detail going forward.
With any insurance like product always check the cover wording (and in this case, also the capacity of the insurer to pay out).
Thanks a lot Iguana. Appreciate you taking the time to respond.
Didn’t know you could insure the de-peg risk. It’s No brainer assuming the premiums aren’t crazy (and assuming Nexus doesn’t blow up. 😂. Gonna need to go back and read your post on nexus)
These are all USD stablecoins, meaning each coin is designed to be worth $1. As a liquidity provider to the pool you will have exposure to all 3 assets, meaning that you could lose money in the unlikely event that any of these stablecoins fail. If you want to know more about stablecoins and their risks, we have a free guide (https://defieducation.substack.com/p/stablecoins-reinventing-dollars), but it isn’t required to complete this farming tutorial.
since btb recommended STX once and you cover yield strategies it would be interesting to see a due diligence of
https://app.arkadiko.finance/stake and
https://app.stackswap.org/farm/list.
With these protocols you deposit STX and stack STX, mint their stablecoin (and repay it with the stacked STX) and provide liquidity earning rewards of 100+% a year.
Great post as usual. The step by step guide to becoming a member of Nexus and buying cover you suggested can't come soon enough!
Agreed. I set up Nexus insurance for my Anchor savings and the process isn't difficult but I'm sure many people would appreciate a guide on it.
Interested in Nexus Mutual guide
Thanks guys. Been meaning to look into this so came at a great time.
One questions - aren’t we also exposing ourself to stablecoin centralization risk of USDC? Ie government clamps down on Centalized stable coins?
Bull recommended a while ago to get out of stable coins because of regulatory risk. Not sure if Bull is still holds this view.
Yeah, if you're farming like this in size then you should insure de-peg risk e.g. with Nexus Mutual. They'll buy your busted stable at $0.90 on the dollar so you still lose something but its good to know you can get 90% of your capital back out fairly quickly (check Nexus history on paying claims).
Although now that I think about this more…
If there’s a regulatory attack on stables and the centralized stables collapse…
Would Nexus be able to cover an event like this?
Loss pooling fails when everyone has an insurable event all at once.
Same reason why insurance companies don’t cover flood, earthquake, war etc.
Exactly. Nobody is big enough to bail out all of stables if one fails. There are different ways to farm in DeFi, not all strategies have exposure to stablecoins. We will be covering this all in more detail going forward.
With any insurance like product always check the cover wording (and in this case, also the capacity of the insurer to pay out).
❤️ u so much iguana
😘
Thanks a lot Iguana. Appreciate you taking the time to respond.
Didn’t know you could insure the de-peg risk. It’s No brainer assuming the premiums aren’t crazy (and assuming Nexus doesn’t blow up. 😂. Gonna need to go back and read your post on nexus)
-> I didn’t know
Only lingering risks are Nexus counterparty risk snd general tech risks (metamask hacked, key loggers, etc)
Seems low enough that I should jump in with more capital.
That's right, you take on some risk with this strategy. You can read our article on stables here and decide for yourself if the yield is appropriate for the risk: https://defieducation.substack.com/p/stablecoins-reinventing-dollars
These are all USD stablecoins, meaning each coin is designed to be worth $1. As a liquidity provider to the pool you will have exposure to all 3 assets, meaning that you could lose money in the unlikely event that any of these stablecoins fail. If you want to know more about stablecoins and their risks, we have a free guide (https://defieducation.substack.com/p/stablecoins-reinventing-dollars), but it isn’t required to complete this farming tutorial.
Love to see more FTM content, especially about the T23omb situation....
I am interested in a Nexus Guide I would love to add more funds
NGMI Questions, but want to be more involved in and understand DeFi
Any recommendations on what our faucet for liquidity would be if stables become regulated and we can't use them to swap for other tokens?
Specifically, how do I cash out after I withdraw my UDSC/USDT/MIM from Curve?
Can something like this be done on an L2 like zksync or something? I'm still trying to wrap my brain around how this works exactly.